Increase in Q1 Sales Year-On-Year Driven by
Growth Mainly from Integration of Intersil and Industrial
Business.
Achieved Gross Margin Improvement for Four
Consecutive Quarters
- Q1 2018: Non-GAAP(1) semiconductor
sales of 182.0 billion yen, up 5.5% year-on-year. Non-GAAP gross
margin of 48.0%, up 2.6 points year-on-year and Non-GAAP operating
profits (margin) of 31.4 billion yen (16.9%), up 2.3 billion yen
(up 0.5 point) year-on-year
- Outlook for Q2 2018: Non-GAAP
semiconductor sales of 192.7 billion yen, down 0.8% year-on-year,
Non-GAAP gross margin of 44.0%, down 1.8 points year-on-year and
Non-GAAP operating margin of 12.8%, down 1.9 points
year-on-year
Renesas Electronics Corporation (TSE:6723, “Renesas”), a premier
supplier of advanced semiconductor solutions, today reported
financial results for the first quarter ended March 31, 2018
(January 1, 2018 to March 31, 2018).
“We have been continuously improving our gross and operating
margins by pursuing sales growth and cost efficiency,” said Bunsei
Kure, Representative Director, President and CEO, Renesas
Electronics Corporation. “We have achieved four consecutive
quarters of improvement in non-GAAP Gross Margin in the first
quarter. Our non-GAAP semiconductor sales also increased by 5.5%
year on year, driven by the integration of Intersil and increased
sales mainly in the industrial business. While we forecast stable
demand in automotive and industrial businesses during the coming
quarter, we expect a similar level of semiconductor sales on a
year-on-year basis mainly due to the impact from the exchange
rate.”
Quarterly Financial Summary (Billion yen)
Non-GAAP
Basis Q1 FY2018
(Jan-Mar 2017)
Q4 FY2017
(Oct-Dec 2017)
Q1 FY2017
(Jan-Mar 2017)
QoQ YoY Net Sales
185.9 210.2 177.6
-11.6% +4.7% Semi. Sales 182.0
206.4 172.6 -11.8%
+5.5% Gross Margin 48.0% 47.9%
45.5% +0.1pts +2.6pts Operating
Income 31.4 34.1 29.1
-2.7 +2.3 Operating Margin
16.9% 16.2% 16.4%
+0.7pts +0.5pts EBITDA
(2) 53.5
54.5 46.2 -1.0
+7.3
Japan GAAP Basis Q1 FY2018
(Jan-Mar 2018)
Q4 FY2017
(Oct-Dec 2017)
Q1 FY2017
(Jan-Mar 2017)
QoQ YoY Net Sales
185.9 210.2 177.2
-11.6% +4.9% Semi. Sales 182.0
206.4 172.2 -11.8%
+5.7% Gross Margin 47.8% 47.7%
43.8% +0.1pts +3.9pts Operating
Income 20.6 21.9 22.1
-1.3 -1.5 Operating Margin
11.1% 10.4% 12.5%
+0.7pts -1.4pts EBITDA 52.3
52.6 42.7 -0.3
+9.6
(1) Non-GAAP Basis: Results excluding non-recurring
and certain other items. Following the completion of the purchase
of Intersil in February 2017, Non-GAAP figures exclude amortization
of goodwill, amortization of purchased intangible assets, costs
related to the Intersil acquisition, stock-based compensation cost,
costs related to the offering, and PPA (purchase price allocation)
effects associated with the acquisition. See page 5 for
reconciliation of Japan GAAP and Non-GAAP. (2) EBITDA: Sum
of operating income, depreciation and amortization, and
amortization of long-term prepaid expenses. Amortization of
goodwill is also included for Japan GAAP-based EBITDA.
Quarterly Semiconductor Sales by Application (Billion
yen) (3)
Following the completion of the acquisition of Intersil in
February 2017, Renesas integrated Intersil into its operations and
reformed its business organization into three business units. To
align with this change, Renesas redefined its semiconductor sales
breakdown to: “Automotive,” “Industrial” and “Broad-based,” the
three application categories that constitute the main business of
the Group, and “Other semiconductors,” that constitute the
businesses that do not belong to the above three application
categories.
Non-GAAP
Basis
Q1 FY2018
(Jan-Mar 2018)
Q4 FY2017
(Oct-Dec 2017)
Q1 FY2017
(Jan-Mar 2017)
QoQ YoY Automotive (4)
92.4 109.1 97.8
-15.3% -5.6% Industrial (5) 50.9
54.2 45.2 -6.2%
+12.4% Broad-Based (6) 38.1 40.9
28.8 -6.9% +32.3% Other
Semiconductors 0.6 2.2
0.8 -70.9% -22.9%
Total
182.0 206.4 172.6
-11.8% +5.5%
(3) Semiconductor sales
by application: From the fiscal year ending December 31, 2018, the
company partially changed the sales categories, consisting of
"Automotive", "Industrial" and "Broad-based" by transferring part
of sales from "Industrial" to "Broad-based" among other changes, to
accurately represent the business content. Accordingly, the figures
of the fiscal year ended December 31, 2017 have been retroactively
amended to reflect the new categories of the fiscal year ending
December 31, 2018. (4) Automotive: Renesas mainly supplies
microcontrollers (MCUs), system-on-chip (SoCs), analog
semiconductors and power semiconductor devices for the “Automotive
control” and “Automotive information” categories. (5) Industrial:
Renesas mainly supplies MCUs and SoCs for “Smart factory,” “Smart
home” and “Smart infrastructure” categories. (6) Broad-based:
Renesas mainly supplies “General-purpose MCUs” and “General-purpose
analog semiconductor devices” to a wide variety of end market
solutions.
Summary of First Quarter 2018 Results
(Non-GAAP Basis)
First quarter consolidated net sales were 185.9 billion yen,
down 11.6% quarter-on-quarter and up 4.7% year-on-year. First
quarter semiconductor sales were 182.0 billion yen, down 11.8%
quarter-on-quarter, but up 5.5% year-on-year. Automotive sales
decreased by 5.6% year-on-year, due to the rebound of the strong
demand last year. Industrial sales increased by 12.4% year-on-year,
mainly owing to the strong demand for factory automation (FA) and
home appliances. Broad-based sales increased by 32.3% year-on-year,
mainly due to the integration of Intersil and the strong demand in
analog semiconductor devices.
Non-GAAP gross margin in the first quarter was 48.0%, 4.2 points
above the Company’s guidance, mainly due to production increase and
cost-containment effects. On a sequential basis, gross margin
increased by 0.1 point and improved by 2.6 points year-on-year.
Non-GAAP R&D (7) expenses in the first quarter were 31.9
billion yen, compared to 34.3 billion yen and 27.0 billion yen in
the sequential and year-ago quarter. First quarter R&D ratio to
net sales was 17.2%.
Non-GAAP SG&A (8) expenses in the first quarter were 26.0
billion yen, compared to 32.4 billion yen and 24.7 billion yen in
the sequential and year-ago quarter. First quarter SG&A ratio
to net sales was 14.0%.
Although OPEX (operating expenses such as R&D and SG&A
costs) ratio to net sales was relatively high due to a temporary
drop in net sales, Renesas aims its long-term financial targets at
around 30%, which is the sum of the ratios of R&D- and
SG&A-to-net sales.
Non-GAAP operating income was 31.4 billion yen, equivalent to
16.9% of operating margin in the first quarter, showing a decrease
of 2.7 billion yen from the 34.1 billion yen on a sequential basis.
Non-GAAP operating margin improved by 0.7 point from 16.2% in the
previous quarter. On a year-on-year basis, non-GAAP operating
income improved by 2.3 billion yen (0.5 point) mainly due to sales
increases.
Non-GAAP net income attributable to shareholders of parent
company in the first quarter was 25.9 billion yen, while Non-GAAP
net income per share was 15.5 yen.
Net cash provided by operating activities in the first quarter
was 15.4 billion yen and net cash used in investing activities was
17.8 billion yen. These resulted in negative free cash flows of 2.4
billion yen.
Capital expenditures for property, plant, equipment
(manufacturing equipment) and intangible assets, were 4.1 billion
yen in the first quarter. These expenditures are based on the
amount of investment decisions made and does not refer to the cash
outlays in the cash flow statement.
Equity ratio was 49.8% as of March 31, 2018, against 47.7% as of
December 31, 2017. Debt/equity ratio (gross) was 0.45 as of March
31, 2018.
(7) R&D: Research & Development (8) SG&A:
Selling, general and administrative expenses
Outlook for Second Quarter and First
Half of 2018
In the second quarter of 2018, Renesas expects semiconductor
sales of 192.7 billion yen (up 5.9% quarter-on-quarter, but down
0.8% from year-ago quarter). For the first half of 2018 ending in
June 30, 2018, Renesas expects semiconductor sales of 374.7 billion
yen, up 2.1% year-on-year.
Non-GAAP gross margin for the second quarter of 2018 is expected
to decrease by 4.0 points quarter-on-quarter and 1.8 points down
from year-ago quarter to 44.0%, mainly due to adjustment in
production volume after an increase in production in the last
quarter, However, Non-GAAP gross margin for the first half of 2018
is expected to come in at 45.9%, up 0.3 point year-on-year, mainly
due to an increase in sales.
Non-GAAP operating margin is expected to be 12.8% (decrease by
4.1 points quarter-on-quarter, down 1.9 points from year-ago
quarter). Non-GAAP operating margin for the first half of 2018 is
expected to come in at 14.8%, down 0.7 point year-on-year due to
proactive R&D investments.
The forecasts for the second quarter of the 2018 are calculated
at the rate of 105 yen per USD and 129 yen per Euro, while the
forecasts for the first half of 2018 are based on the rate of 107
yen per USD and 131 yen per Euro.
Capital expenditures are based on the amount of investment
decisions made for property, plant and equipment (manufacturing
equipment) and intangible assets during the first half of 2018, and
they are expected to be 3% of net revenue.
References
Refer to Renesas Electronics’ earnings report “Renesas
Electronics Reports Financial Results for the Three Months Ended
March 31, 2018” for the consolidated balance sheets, the
consolidated statements of income and the consolidated statements
of cash flows.
Refer to the separate sheet for Japan GAAP – non-GAAP
reconciliation.
Forward-Looking Statements
The statements in this press release with respect to the plans,
strategies and financial outlook of Renesas Electronics and its
consolidated subsidiaries (collectively “we”) are forward-looking
statements involving risks and uncertainties. We caution you in
advance that actual results may differ materially from such
forward-looking statements due to several important factors
including, but not limited to, general economic conditions in our
markets, which are primarily Japan, North America, Asia, and
Europe; demand for, and competitive pricing pressure on, products
and services in the marketplace; ability to continue to win
acceptance of products and services in these highly competitive
markets; and fluctuations in currency exchange rates, particularly
between the yen and the U.S. dollar. Among other factors, downturn
of the world economy; deteriorating financial conditions in world
markets, or deterioration in domestic and overseas stock markets,
may cause actual results to differ from the projected results
forecast.
About Renesas Electronics Corporation
Renesas Electronics Corporation (TSE: 6723) delivers trusted
embedded design innovation with complete semiconductor solutions
that enable billions of connected, intelligent devices to enhance
the way people work and live—securely and safely. A global leader
in microcontrollers, analog & power and SoC products, Renesas
provides the expertise, quality, and comprehensive solutions for a
broad range of Automotive, Industrial, Home Electronics, Office
Automation and Information Communication Technology applications to
help shape a limitless future. Learn more at renesas.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20180510006441/en/
Media ContactsRenesas Electronics CorporationKyoko
Okamoto, +81 3-6773-3001pr@renesas.comorInvestor
ContactsRenesas Electronics CorporationMakie Uehara, +81
3-6773-3002ir@renesas.com